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ABCC Brexit Update - 13 March - MPs Again Reject May’s Brexit Deal

MPs Again Reject May’s Brexit Deal

MPs voted to reject an amended version of PM Theresa May’s Brexit deal on 12 March by a majority of 149. (391 votes to 242)

The vote followed legal advice published by Attorney General Geoffrey Cox earlier in the day. Cox said that while new arrangements ‘reduced the risk’ of the UK being bound to the Northern Irish backstop arrangement – the most contentious issue in May’s Brexit deal – he was unable to guarantee the UK’s ability to leave it unilaterally.

Following Cox’s intervention, the influential Brexiteer grouping within the Conservative Party, the European Research Group said it could not recommend to its MPs to approve May’s deal. The Northern Irish Democratic Unionist Party (DUP) subsequently also rejected May’s deal.

Without the support of the DUP and her own party, May was unable to pass her deal. Despite this loss, PM May was successful in convincing 40 Tory MPs who voted against her deal in January to vote in favour. Three Labour MPs also voted in favour.

Labour leader Jeremy Corbyn responded to the lost vote by calling for a General Election.

European Council President Donald Tusk said that there was now an increased likelihood of a ‘No Deal’ outcome tweeting, “it is difficult to see what more we can do.”

The vote paves the way for another vote in the House of Commons this evening, 13 March. MPs will vote on whether they support a ‘No Deal’ Brexit. PM May will allow her MPs a ‘free vote’ or ‘vote of conscience’.

Commentators note that there are not enough supporters of a ‘No Deal’ Brexit in the House of Commons for this vote to pass.

If and when the 13 March vote fails, MPs will then vote by March 14 to request an extension to the EU’s Article 50 – the bloc’s secession clause – to delay Brexit beyond 29 March.

PM May announced the UK Government will publish details on 13 March on how the UK will manage its land border with Ireland in the event of a ‘No-Deal’ Brexit.

Pound Sterling fell 1.1% against the U.S. Dollar following the March 12 vote.

16 days remain until the UK is scheduled to leave the EU on 29 March 2019.

MPs Vote to Again Reject PM May’s Brexit Deal

Following months of anticipation, MPs voted to reject an amended version of PM Theresa May’s Brexit deal on 12 March by a majority of 149 votes. (391 MPs voted against the deal; 242 in favour.) The 12 March vote followed the first ‘meaningful vote’ on the deal in January, when PM May’s deal was rejected by a margin of 230 votes.

As background, May’s amended deal reflected the inclusion of three documents to her existing deal to address UK concerns over the Northern Irish backstop. The UK and EU agreed on 11 March to add two supplementary documents to May’s Brexit deal:

a ‘joint legally binding instrument’ on the Withdrawal Treaty which would enable the UK to start a ‘formal dispute’ with the EU if it felt the EU were keeping the UK tied to the backstop indefinitely; and

a ‘joint statement’ to the existing political declaration on a future UK/EU relationship, with a commitment to replace the backstop with alternative arrangements by December 2020 – the planned end date of the UK’s transitional withdrawal period.

A third document known as a ‘unilateral declaration’ would then be put forward by the UK government, outlining the UK’s ability to leave the backstop arrangement unilaterally should negotiations for a future UK/EU relationship fail.

The Attorney General’s Verdict was Critical

On 12 March, ahead of the second ‘meaningful vote’ on May’s deal, the Attorney General Geoffrey Cox published his legal advice on the above documents. Cox said that whilst the new arrangements ‘reduced the risk’ of the UK being bound to the Northern Irish backstop – and therefore the EU’s Customs Union – he was unable to guarantee the UK’s ability to leave it unilaterally.

Cox’s legal advice was essential for May’s ability to pass her deal through the House of Commons later in the day.

Following Cox’s intervention, the influential Brexiteer grouping within the Conservative Party, the European Research Group (ERG) said it could not recommend to its MPs to approve May’s deal. ERG Chairman, Jacob Rees-Mogg later said, “the problem with the deal was that it didn’t deliver on the commitment to leave the EU cleanly and that the backstop would have kept us in the customs union and de facto in the single market.”

The Northern Irish Democratic Unionist Party (DUP), on which May is reliant to pass legislation, subsequently also rejected the deal. Without the support of the DUP and her own party, May was ultimately again unable to pass her deal. May was however successful in convincing 40 Tory MPs who voted against her deal in January to vote in favour. Three Labour MPs also voted in favour.

Labour leader Jeremy Corbyn responded to the lost vote by calling for a General Election and European Council President Donald Tusk said there was now an increased likelihood of a ‘No Deal’ outcome tweeting, “it is difficult to see what more we can do”.

Another Vote Tonight on a ‘No Deal’ Brexit

The 12 March vote now paves the way for another vote in the House of Commons this evening, 13 March. MPs will vote on whether they support a ‘No Deal’ Brexit. In order to avoid further schisms within the party, PM May has announced she will allow her MPs a ‘free vote’ or ‘vote of conscience’ this evening.

Commentators note that there are not enough supporters of a ‘No Deal’ Brexit in the House of Commons for tonight’s vote to pass. Despite this, PM May announced the UK Government will publish details on 13 March on how the UK will manage its land border with Ireland in the event of a ‘No-Deal’ Brexit.

An Extension to Article 50?

If and when tonight’s vote fails, MPs will then vote by tomorrow, March 14 to request an extension to the EU’s Article 50 – the bloc’s secession clause – to delay Brexit beyond 29 March.

As stated in earlier updates, it is important to note that an extension to Article 50 would come through a formal request from the UK to the other EU member states. Any extension would require full agreement of all EU member states and runs into the difficulty of the upcoming EU parliamentary elections in May. If still a member of the EU in May, the UK would be legally required to take part in these elections and field candidates.

Also, as mentioned our 12 March update, there are reports that any request to extend Article 50 would be met with demands by EU leaders for the UK to pay an additional punitive financial charge to remain in the EU, past 29 March. With the clock ticking towards 29 March, however, commentators note that the probability of some sort of extension is growing.

The Markets

In the markets, the Pound Sterling fell 1.1% against the U.S. Dollar following the March 12 vote.

16 days remain until the UK is scheduled to leave the EU on 29 March 2019

The ABCC and Brexit

The ABCC will continue to follow these developments closely in the coming weeks. We look forward to keeping members up to date with the very latest from London and what it possibly means for the Australian-British business community.

If you would like to receive more frequent Brexit updates or have any questions, please feel free to contact our office on abcc@britishchamber.com.

By Paul O’Hagan

Paul O’Hagan is the ABCC’s General Manager in Victoria, South Australia and Western Australia. Prior to joining the ABCC, Paul was Senior Political and Economic Advisor to the U.S. Government in London, covering Brexit.